This April Housing Secretary James Brokenshire announced planned changes to the rental sector. The changes include the scrapping of section 21 notices which we looked at back in April here, these actions were approved by Theresa May with the aim of protecting tenants from unfair eviction.
Under the new proposals, landlords will have to provide evidence for bringing a tenancy to an end. This is a change from the current rules that allow eviction at any time after the fixed term has passed, without specifying a reason.
The good news is, for responsible landlords, which make up the majority of landlords within the private rental sector, very little will change. That being said, there are still some facts you will need to be aware of.
As we approach the end of the consultation (12th of October) over the proposal, we take a look at the latest plans in more detail and explain what landlords need to know.
What is a section 21 notice?
A section 21 notice is also known as a notice to quit or a 'no fault possession notice' as landlords don't have to give a reason for wanting to take back possession of the property.
This section of the 1988 Housing Act and the notice are used if a section 8 notice is not possible or wanted. It can only be issued when the property is on an assured shorthold tenancy agreement, or an AST.
A Section 21 notice gives tenants at least two months’ notice to vacate the property. This, however, cannot be used on fixed-term rentals.
Section 8 notice
A section 8 notice can be used for tenants on an assured shorthold tenancy with or instead of a section 21 notice. However, it requires the landlord to provide a reason for the eviction like a breach of the tenancy agreement or non-payment of rent. It can also be used if the tenant has shown antisocial or criminal behaviour.
When can section 21 be used?
A landlord can use a section 21 notice to evict tenants when:
- A fixed-term tenancy ends - if there is a written contract
- During a tenancy with no fixed end date - a ‘periodic’ tenancy
A landlord cannot use a Section 21 notice if any of the following apply:
- It’s less than 4 months since the tenancy started, or the fixed term has not ended unless specified in the contract
- The property is categorised as a house in multiple occupations (HMO) but does not have the proper HMO licence from the council
- The tenancy started after April 2007 but the landlord has not put the tenants’ deposit in a deposit protection scheme
- The tenancy started after October 2015 but the landlord has not used form 6a or a letter with all the necessary information included
- The council has served an improvement notice on the property in the last 6 monthsThe council has served a notice in the last 6 months that says it will do emergency works on the property
- The landlord has not repaid any unlawful fees or deposits that were charged to the tenant
A landlord is also unable to use a section 21 notice if they haven’t provided their tenant/s with the following:
Check out: HMO Licensing for Landlords
Will scrapping section 21 notices mean indefinite tenancies?
The Government states that removing section 21 will give an opportunity for open-ended tenancies, but interestingly, government data cited on Landlord Today shows that 90% of tenancies are not ended by the landlord but by the tenant. Fantastic Cleaners reiterate this, stating the majority of their same or next day end of tenancy cleans are because of tenants moving on.
Most importantly though, for responsible landlords, which make up the majority of landlords within the private rental sector, very little will change. They will need to have good reason to remove tenants from their properties, such as rent arrears, destruction of the property, selling the property, or wanting to move back into the property.
Should any of these issues arise, the government plans to expedite Court processes, meaning that landlords are able to regain the use of their property quickly. At the moment, it takes over five months for a private landlord to regain their property should the tenant choose to fight the decision in court.
How will landlords end tenancies after the change?
To end an assured tenancy if the abolition of section 21 takes place, landlords will have to use section 8. This means that they will have to provide a sound reason for the eviction. Ministers will amend the section 8 eviction process to allow property owners to regain their home if they plan to sell it or move into it.
What does this mean for profits?
For landlords concerned about their profit, this change in legislation makes the relationship that they have with their tenants all the more important. Landlords should look to choose tenants who are willing to stay on a longer-term basis, and fit out properties to a high standard, encouraging tenants to stay longer and look after the property.
This new legislation should not disrupt profits for many landlords who currently rent properties under Assured Shorthold Tenancies (AST), provided they do not change the use of their property.
Click here to get an instant rental valuation and see if you’re charging the correct rent.
What measures are planned to alleviate the removal of section 21?
The good news is, the Government is planning to improve the section 8 eviction process. Some of the proposed improvements are:
- Widening the current ground for landlords, their partners or spouses or their families to move in or sell the property
- Altering the current mandatory ground 8 so that landlords need two months’ arrears on notice and one month’s arrears at the time of the hearing
- Possibility of strengthening antisocial behaviour grounds
- Domestic violence grounds to be made available to private landlords
- Improve ground 13 to give a way for landlords to use it if the tenants routinely refuse access to the property for safety checks or repairs
What will happen with existing tenancies?
The Government confirmed that they do not plan for the changes to be retrospective, which means that any existing assured shorthold tenancies will still have use of Section 21.
When will the changes take effect?
It does seem likely that section 21 will be scrapped at some point, but the changes are still being consulted on. After the consultation ends on Saturday 12 October 2019 the Government will have to respond.
If the law is passed by Parliament and approved by the Queen, the Government has proposed a six month transition period before the law comes into force. This means that we probably won’t see sections 21 being abolished before late 2020.
Are you complying with current legislation?
To serve a section 21, or if the time comes, a section 8, landlords need to be vigilant that they comply with all current legislation.
At Portico, we ensure this is the case with all our landlords, plus make sure that certificates like gas certificates are updated automatically. That means you can rest assured you will never be faced with a penalty or imprisonment for non-compliance.
More and more councils are requiring landlords to be licensed and HMO definition is widening – we also take care of this. Our in-house paralegal team also ensure that our tenants comply with current legislation and have the right to rent in the UK.
We’ll handle the deposit return and hold the deposit via the DTS scheme. It is so easy to breach deposit protection rules with the de-regulation Act and the Superstrike ruling - just registering the deposit with a protection scheme is not enough. We’re proud to say that 99% of our deposits are returned without a dispute.
Find out about our lettings packages for landlords, get an update on the rental or sales valuation of your property, or discover how to maximise your profits through Airbnb.
If you’d like to discuss your lettings options or any of the above with our friendly team of experts, give us a call on 0207 099 4000. !!!!!!!